Medical residents can deduct local transportation costs for travel to a temporary hospital location.
Transportation expenses include all of the following:
- Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home.
- Visiting clients or customers.
- Going to a business meeting away from your regular workplace.
- Getting from your home to a temporary workplace when you have one or more regular places of work. These temporary workplaces can be either within the area of your tax home or outside that area.
The most common eligible automobile costs for medical residents are related to travel to a residency hospital rotation (outside affiliated hospital group), offsite medical conventions, emergency calls, clinical society meetings, and house calls. An employee’s transportation expenses incurred in going between the employee’s residence and a work location not involving overnight travel generally are nondeductible personal commuting expenses rather than deductible business expenses.Commuting costs from home to your regular hospital or office and back to home are personal and not deductible.
For example, a family medicine resident at Mount Sinai Hospital completes an obstetrics rotation at Hamilton General Hospital. The travel expenses from home to the temporary work location (Hamilton General Hospital) are deductible as local transportation costs.
The requirement is that the employee was ordinarily required to carry on the duties of the office or employment away from the employer’s place of business or in different places. The CRAs position is that daily transportation expenses incurred by a doctor in going between the doctor’s residence and one or more offices, clinics, or hospitals at which the doctor works or performs services on a regular basis are nondeductible commuting expenses.
You must be able to substantiate the auto expenses that you claim through adequate records, such as a travel log: record the date, destination, business purpose and number of kilometres you drove. You must also obtain a Tax Form T2200 from the payroll office of your home hospital. You can then claim the auto travel as a percentage of your total car expenses. If you use your car you will need to allocate your automobile expenses between business and personal use based on kilometers driven during the year.The employment use percentage is then applied to a “pool” of all auto expenses you paid during the year. The result is your deductible auto expenses. You will need to keep track of all costs for gas, insurance, repairs and maintenance, interest on a car loan, car lease payments, depreciation for purchased vehicles, tolls paid, parking fees and any other car-related costs. If your deductible trip is by taxi or public transportation retain the receipt or make a notation of the expense.
Please get in contact with us for further details on deducting local transportation expenses. Elliott Stone, CPA, CA, is the founder of MD Physician Tax Service in Toronto. Email: [email protected]